American Airlines was well into a simultaneous revamp of its Passenger Services System (PSS) and Flight Operating System (FOS), its two most mission-critical families of applications, when the airline changed course last January.

The plan still calls for a gradual migration off of an inflexible and outdated mainframe architecture in favor of a modern, distributed computing platform. But while the FOS focus has always been buy rather than build whenever possible, the focus for the PSS project has turned sharply away from rewriting all of the applications that make up the system in house in favor of buying existing software whenever possible and modifying it as needed.

In addition to modernizing its back-end infrastructure and applications, American is providing flight crews, airport agents and maintenance staff with access to operational information from a range of new mobile devices. These devices provide new capabilities to different staff functions, including:

Aviation maintenance technicians (AMTs) are using Samsung Galaxy Tab tablets to communicate with tech services, access technical information, receive and close tasks, and check maintenance history and parts availability -- all while working on the aircraft. Previously, AMTs had to return to their desktop computers or refer to manuals.

Pilots will soon replace their flight bags with an electronic version that runs on an iPad. American estimates that eliminating the 35-lb bags from every cockpit will save the airline $1.2 million of fuel annually.

-- Robert L. Mitchell

For the last 47 years, both PSS and FOS have run on Sabre, a mainframe-based system that now lacks the flexibility and speed to market that the airline needs to compete. American began its modernization initiative with the launch of two projects several years ago.

The Jetstream project will replace the current PSS, which handles reservations and other customer-facing functions, while Horizon has already begun replacing many of the applications that make up the FOS, responsible for flight operations functions such as route planning and crew scheduling.

"Tackling these two important systems gives us the opportunity to rethink the customer experience as well as get away from massive, monolithic systems...that make it more difficult for us today to be responsive to customer needs in the marketplace," says Maya Leibman, American's CIO.

While American says that the projects are about cost savings and faster time to market, more is at stake here, says Henry Harteveldt, an airline and travel analyst with Atmosphere Research Group. "It's about how these new systems can help American generate more money," by creating new revenue-generating opportunities.

For her part, Leibman declined to go into specifics about the revenue-generation aspect.

The new systems interconnect applications using Web services and enterprise service buses (ESBs) that are part of the airline's service-oriented architecture (SOA). This will allow American to do things like share data in real time between applications, whether those run on or off the mainframe. A Horizon application might need to know, for instance, that a specific plane has been delayed, or that weather is threatening one city, or that a particular series of jets needs FAA-ordered maintenance.

One ESB, Flight Hub, can pull data from the FOS on the mainframe, or directly from other applications designed to run in the new, distributed computing environment.

Like other major U.S. airlines, American has found itself falling behind foreign carriers in moving to a modern -- and flexible - architecture for its POS and FOS systems. A modern software and hardware infrastructure will allow American to move much more quickly in a world where a substantial percentage of business comes in through AA.com, the airline's website, as well as from travel partners around the Web.

To adapt, American has over the years bolted new features and functions onto the mainframe through the use of application front ends. But that still limits flexibility when it comes to distributing and bundling new fare offerings or creating different privilege options for customers, such as lower change fees or refundable tickets. Today's airlines need to be nimble, respond quickly to market changes, and be free to sell they way they need to sell. "You see very few 47-year-old cars on the road these days. But with the airlines, some of their most important decisions are tied back to Mad Men-era technologies," says Harteveldt.

Former CIO Monte Ford initiated and managed the projects until 2011. Ford departed after 11 years as American's CIO for reasons that were not made public, and the airline tapped Leibman, the former president of American's AAdvantage Loyalty program, to fill the role in December 2011. That was a month after the airline filed for Chapter 11 bankruptcy protection.

It was Leibman who reversed the initial build versus buy strategy last January -- a move that Harteveldt calls "gutsy."

"It takes a lot for a CIO to go to management and say, 'I think we need to rethink this decision,' " he says. American IT execs won't comment on how far they had gotten, or how much they had spent. But the airline hadn't started coding to replace the Jetstream/PSS yet - that project was still in the business process evaluation stage. On the FOS side, work had already been completed on many programs.

The decision to change focus was driven not just by the need to reexamine priorities as the business reorganized, but by changes in the market that could not have been anticipated when American made its original plans. Initial planning for the projects began with American's outsourcer, EDS, before Hewlett-Packard acquired it in 2008.

But after the projects officially launched in 2010, HP laid off many airline-related programmers, project managers and others associated with the Jetstream project, according to Harteveldt. "That was one of the factors that contributed to the project's problems," he says. "It just became a very frustrating experience for American."

Liebman's response: "I can't comment or speculate on our business partners' internal matters, but HP remains an important and strategic business partner of American Airlines."

It was a good time to take a step back and rethink the strategy, Leibman says. "We questioned whether it made sense to make the tremendous investment of time and resources that go along with building something yourself -- or look for something that others had already built and tested. In this case we made the decision that we wanted to buy," she says.

Jetstream's slow take-off

Jetstream, the new PSS initiative, officially got off the ground in 2010. (Some early work, including the decision to dedicate resources to the project, had started in 2007.) Led by vice president of business technology services Daniel Henry, who reports to Leibman, Jetstream will eventually include modules and sub-modules to handle reservations, passenger itinerary management, shopping, ticketing and pricing, check-in and other functions. "Our ultimate goal is to have a customer-centric passenger services system, which will allow our agents to pull up a customer by name and have all their relevant information at their fingertips," he says.

Henry says American is intentionally taking it slow. "This is not a big bang project. This is the heart of the airline, so we are taking a very methodical approach," he says.

The sheer size of the Jetstream project makes that necessary. "I am not sure you can get more complex than a PSS," Henry says. "There's a lot of data transfer and transformation that goes on," with more than 100 applications sharing or synchronizing data with the core PSS software on the mainframe. The PSS brokers the sharing of data, as well as data transformation and processing.

The new platform must do all of that and enable rapid change. "Our success will be defined by: Can we change it the next day? That's our number one success factor," he says.

Henry's team has made progress in reviewing and documenting business processes, policies and procedures, but programming plans stalled when American made public its decision to terminate its contract with HP in June.

American would say only that the buy versus build decision was not made at any one moment in time but was made over time as they evaluated different factors. "Thus, we made announcements and decisions about Jetstream as each decision point was reached," a PR spokesperson said.

American fell into the trap of thinking that it had to build from scratch to get everything it wanted, says Harteveldt. "An airline the size of American will certainly need a lot of tailoring, but I was never convinced that they needed a totally custom-developed product." Changing to a buy strategy was a good move, he adds.

"How you manage an itinerary, that's commodity stuff," Henry explains. "But there's a competitive advantage in implementing different ways of checking in people. We want the flexibility to have [the] ability to modify [that]," he says. American also wants the ability to unbundle fares and offer new options, and has developed a merchandizing application that lets it offer such options as priority boarding.

But those functions are all still tied back to the PSS on the mainframe. Plugging those applications into Jetstream's new core transaction engine will offer greater back-end flexibility, the airline's IT executives hope.

Maya Leibman's focus

CIO Maya Leibman says the goal of American's IT modernization effort is to streamline the customer experience from beginning to end in an effort to increase customer loyalty and revenue. In leading the charge, Leibman says she is personally focused on three areas:

"Collaboration across my technology organization, with our internal business partners and with our external partners and vendors."

Transformation. "We are looking at everything we're doing and determining if there's a better, smarter way to be doing it."

Speed to market. "We need to be more responsive, nimble and fast in order to meet all of the challenges we have."

-- Robert L. Mitchell

Now the question is which off-the-shelf software to choose. American is in the process of determining which product might be best, says Henry. Options include a new offering from Sabre (a former American Airlines division long since spun off); Amadeus, which makes software used by many European carriers; and ITA Software by Google.

For now, the PSS continues to run on the mainframe. American has put more modern user interface "wrappers" around its green-screen applications, but those applications are, for now, still locked into the Sabre system. "We need to get deeper into the stack and change the core engine and decouple the rules so we can change them rapidly," by leveraging American's SOA, Henry says. "We want to open up the flood of information that's locked into that system."

Ultimately, Jetstream will help American bring in new revenue through AA.com by enabling the airline to offer a mix-and-match menu of different options -- Leibman's main focus -- but it will also deliver cost savings by allowing passengers to do more things for themselves, thereby reducing the need for agent staffing at airports, says Harteveldt.

Horizon: Flight operations get a makeover

Horizon, the airline's name for its revamped FOS, is, if possible, even more complex than the PSS, says Tracy Hassell, managing director for the Horizon program and another direct report to Leibman. "The FOS let us run the airline, but every time we wanted new functionality it would take several months and a lot of money to go do it. We needed to do something differently and mitigate that," she says.

The FOS covers four broad functional areas: flights, crew management, cargo and maintenance, and engineering. The current mainframe runs an older version of IBM's Transaction Processing Facility software. "It is all one big database and it's not relational. That created constraints for us," she says.

The flat-file database makes tight integration between applications and the file system challenging, because there's no SQL interface to abstract the application layer from the database layer, as SQL-compliant databases do, she says. So rather than being able to define new SQL interfaces to the database, American has always had to create a custom application layer. "This has made the integration of new applications with the legacy FOS very complex and expensive," she says.